Some residents queued at petrol stations with jerry cans to fill up, while other civilians have begun taking up arms.

The statement came after Kurdish authorities deployed troops to the southern part of the breakaway province and put their security forces on 'high alert' as they issued increasingly urgent warnings over the Iraqi forces massing in the south for an offensive to seize Kurdish-held oil fields.

Authorities insist the situation is under control in the ethnically divided but Kurdish-majority northern city, where control is disputed between the Kurds and the central government in Baghdad.

"The security situation is stable and there have been no incidents so far," said police chief, General Khattab Aref of Kirkuk city, home to more than a million Kurds, Arabs and Turkmen.

On Friday, as the Iraqi army launched an operation to retake Kurdish-held positions around Kirkuk, some civilians took up arms and deployed on the streets.

The Iraqi army and the Kurdish peshmerga have been key allies of the US-led coalition in its fight against the Islamic State group and the threat of armed clashes between them poses a major challenge for Western governments.

Ethnically divided but historically Kurdish-majority Kirkuk is one of several regions that peshmerga fighters took over from the Iraqi army in 2014 when the jihadists swept through much of northern and western Iraq.

But Baghdad is bitterly opposed to Kurdish ambitions to incorporate the oil-rich province in its autonomous region in the north and has voiced determination to take it back.

An Iraqi general said on Friday that troops were advancing to retake positions occupied by the peshmerga in June 2014, and had already retaken a base west of Kirkuk after the Kurdish fighters withdrew.

Another officer, who also spoke on condition of anonymity, stressed the army had no intentions to enter Kirkuk, and that there were no confrontations outside the city.

The peshmerga's Kirkuk commander, Jaafar Sheikh Mustafa, said his forces had withdrawn from areas they had recently entered during fighting against IS in the west of the province.

Videos posted on Twitter appeared to show well-armed Iraqi rapid response teams who claimed to be closing in on Kurdish positions.

However a military officer in the state-backed Popular Mobilization Units was quoted as saying by the Al Sura website that the operations were aimed at routing the last remnants of Islamic State from nearby Hawija, rather than the Kurds.

“Our operations are clearing North Hawija from ISIS. Anyone disseminating news that this is against Peshmerga is incorrect,” Captain Mustafa al-Hadad reportedly said.

Kurds bolster forces

Senior Kurdish officials have vowed to defend the southern stretches of the enclave "at any cost," despite reports that some of their forces have withdrawn from the battlefield in an attempt to cool the situation.

On Friday morning The Kurdistan Regional Security Council (KRSC) said that federal troops and allied paramilitary units had been massing in two areas south of Kirkuk, a Kurdish-held but ethnically divided city that lies at the heart of the decades-old dispute.

It said that both the army and Popular Mobilisation Forces (PMF) -- paramilitary units dominated by Iran-trained Shiite militia -- had been deploying tanks and heavy artillery to Bashir and Taza Khurmatu, two mainly Shiite Turkmen areas.

"These forces are approximately three kilometers (two miles) from peshmerga frontline positions," it said.

"Intelligence shows intention to take over nearby oil fields, airport and military base."

The Kurdish Regional Government (KRG) Vice President said that at least 6,000 peshmerga were being ordered into Kirkuk to defend the province, a report in Rudaw news agency said. The deployment will reportedly bolster "tens of thousands" of security forces already based in the area.

"There are threats by the Iraqi army that has deployed forces near Kirkuk, supposedly to attack Kirkuk," Vice President Kosrat Rasul was quoted as saying by the news agency, "But I don't believe it will be easy for them to do that."

"Thousands of heavily armed peshmerga units are now completely in their positions around Kirkuk," a top aide to Kurdistan regional president Masoud Barzani tweeted.

"Their order is to defend at any cost," Hemin Hawrami said.

On Thursday, Kurdish peshmerga fighters briefly closed main roads out of federal government-held areas for fear of attack further north.

Calls for intervention

A top aide to Kurdish leader Massoud Barzani urged the international community to intervene and call on Iraqi Prime Minister Haider al-Abadi to "order PMF to pull back if he can or if they listen to him".

"No escalation from our side. Just defend and roll them back if they attack," the adviser, Hemin Hawrami, said.

Kirkuk province is the location of northern Iraq's main oil fields and, even though far more crude is now pumped from the south, it is bitterly disputed between Baghdad and the Kurds.

On Thursday, Kurdish peshmerga closed the two main roads from Mosul to the Kurdish cities of Erbil and Dohuk for several hours for fear of an attack in the area, Kurdish officials said.

Al-Abadi has denied any attention of ordering an assault on his own people but the Kurds were unconvinced and accused the army's militia allies of trying to provoke a confrontation.

"We call on the Iraqi government to stop the PMF aggression in Kirkuk and north Mosul," the KRSC said.

"Kurdistan continues calling for dialogue and peaceful means to settle differences. The international community too must denounce the military deployments and call on the Iraqi government to return to talks."

The rise in tensions came two weeks after Kurdish voters overwhelmingly backed independence in a non-binding referendum that the federal government condemned as illegal.

Polling was held not only in the three provinces that have long formed an autonomous Kurdish region but also in neighboring areas, including Kirkuk, that Kurdish forces seized from the Islamic State group during the fightback against the jihadists' lightning 2014 offensive through areas north and west of Baghdad.